Earnings Release: Here's Why Analysts Cut Their Rigetti Computing, Inc. (NASDAQ:RGTI) Price Target To US$21.44
As you might know, Rigetti Computing, Inc. (NASDAQ:RGTI) last week released its latest third-quarter, and things did not turn out so great for shareholders. Earnings missed the mark, with revenues of US$1.4m falling badly (60%) short of expectations. Losses were mildly higher, with a US$0.08 per-share loss being 7.7% above what the analysts modelled. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Rigetti Computing after the latest results.
Taking into account the latest results, the current consensus from Rigetti Computing's eleven analysts is for revenues of US$42.4m in 2027. This would reflect a major 231% increase on its revenue over the past 12 months. Per-share losses are expected to explode, reaching US$0.32 per share. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$44.3m and losses of US$0.29 per share in 2027. So it's pretty clear the analysts have mixed opinions on Rigetti Computing after this update; revenues were downgraded and per-share losses expected to increase.
Check out our latest analysis for Rigetti Computing
The consensus price target fell 20% to US$21.44, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Rigetti Computing analyst has a price target of US$40.00 per share, while the most pessimistic values it at US$12.00. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Rigetti Computing's growth to accelerate, with the forecast 161% annualised growth to the end of 2027 ranking favourably alongside historical growth of 0.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 26% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Rigetti Computing to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded Rigetti Computing's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Rigetti Computing analysts - going out to 2028, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 4 warning signs for Rigetti Computing (1 shouldn't be ignored) you should be aware of.
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